If you live in an economy where transparent pricing is the norm, that is, where the price of a good is openly displayed by the seller, you tend to take it for granted.1 The souqs of North Africa are not such markets.2 Hundreds of stalls, thousands of people, hundreds of thousands of items for sale, not a single visible price. Not one, nowhere. You ascertain price by question and bargaining; you’re meant to haggle. Is this a measure to save on price tags? Is it simply the perpetuation of an ancient culture? Do people secretly enjoy this? Haggling is an inefficient, time-consuming way of trading.3 It is enjoyable to neither buyer nor seller, I don’t care how strongly sociologists or romantics weaned on bedside stories from the Arabian Nights may gainsay.4 That’s why modern economies have done away with it. Is this simply the way things are done in certain places? What? In a world aspiring to the global economy where everyone can see the efficiency of alternative systems? Come on.

Souk Entrance Marrakech

No, gentle friends, no. The system is set up for seller to extract the maximum consumer surplus from the buyer. Less technically stated, opaque pricing deprives buyers of paying less than what they internally value and are prepared to pay for a good. In the souq the advantage always lies with the seller.5

A steep information asymmetry operates in favour of the seller who alone knows the quality and intrinsic price of the good. The seller – unfailingly an unctuous, schmoozing, calculating Moroccan backed up by one or more male helpers with intense eyes -let’s give them the charactonym of Sinbad and Co. – dictate the pace of transacting. Sinbad & Co. are everyone’s best friends and have all day. The buyer is some tourist schmuck who must buy a trinket or two before moving on to the next delight of a-thousand-and-one rip-offs. He is under several disadvantages. He has no notion of price, he has no notion of quality, neither does he have the time or cunning to wear down Sinbad & Co. All the buyer has is the power to walk away, but even that is illusory.6 He is right there after all. His wife deserves a little something for neglect endured. He has to show his children he loves them. His mistress expects a gift or two for attentions rendered, as does his lover, and while his secretary doesn’t actually expect anything, well, she deserves something for getting him organised. So he has to buy. And thus the buyer, our schmuck, delivers himself wholesale into the eager clutches of Sinbad and Co. And now, he is stuffed.

Souk and Old Square, Marrakech

I’m in the souq in the old medina of Casablanca.7 For the usual reasons, I have to buy. Life and colour abounds. I skip through the neatly arranged stands selling the exciting smells of cumin, coriander and cardamom. Perfume vendors sell the wondrous huile d’Argan, the concentrated pure oil, not the commercial stuff diluted with alcohol, they assure you, along with exotic musks and lavenders and lotus flower and sandalwood oils.9 Children scurry around women pacing along in burquas. Traders call out to you. I glide past the multi-coloured olive stands, the meat stands, the live produce stands, past small barber shops and hashish cafes and eventually wander into the touristy part of the medina where they sell wares one can take home in a plane.

Casablanca Medina – Spice seller

True to custom, nothing has a price. There are the goods, I see them, but I don’t see a price, neither do I have the foggiest idea of it. The price of a silver chain? A shawl? You tell me. That I had been to the souq in Marrakech hadn’t helped; I had built no experience. Before long I found myself in a stall pawing a kaftan (more precisely, a djellaba, but let’s not get technical).

Fruit Seller, souq, Casablanca

“You need a kaftan monsieur?” the trader asks in Moroccan French.

“I may misguidedly fancy a kaftan but there’s no way I actually need one”, I retort in English, immediately dumping him at disadvantage. “And no thanks I’m actually just browsing”.

“This kaftan very special. Feel it. Superior quality”, he replies in English.“My bags are overflowing and it’s too heavy to take on the aeroplane.”“Look sir, this is quality. I show you another kaftan, much lighter, but bad quality, like this one, here, feel. You see? Light but no quality. But this one hand-made of wool and silk, not artificial and not too heavy. Pure quality, pure quality.” Sinbad fixates on my eyes, unblinking. So does his helper.

The kaftan pleased. True, it had a quality feel to it. But did I have to buy it? I’ll probably only wear it to some fancy dress party or other, but no-one throws them in Cape Town any longer excepting for uncool me. If I buy it it’s going to end up gathering moths in an chest along with the Maharajah’s outfit I bought in Jaipur, the Chairman Mao suit I bought in Hangzhou, the genuine Panama hat and other assorted accoutrements so necessary to modern living. Now you know why I throw fancy dress parties. I have to.

The merchant continues to stare me down. Ineluctably, from some recessed part of my vocal chords, ruinous sounds escape.

“Hmmm… How much is it?”
That’s the gap Sinbad needed. Once you ask, you’re on your way to buying.
“For you special price. Where you from? Iran?”
“No”, says a helper, “Italy!”
“Cape Town” I say.“Ah Cape Town Afrique du Sud Fifa football Bafana-Bafana Nelson Mandela! What price you offer me? Huh?” He asks me what I will offer him for it. I clam up. Lesson No. 1: Never, ever, open the bidding. You have no notion of price apart from the depth of your pocket, and that’s precisely what he wants to know. I divert my attention to some slippers and let him stew. He follows me around.“What you offer me?”I mumble something about some tablecloth, completely deaf to him. Do you see the games involved? He eventually cracks. “For you, special price. 1500 dirham.”8

That’s all I needed. I had no idea of the price but I’d done some research. For more expensive items sellers generally open at around two times their occluded settling price. I assume a look of asphyxiated horror.

“Wha-a-a-a-a-t? Wh-a-a-a-a-a-at?” I choke, groping a column for balance. “Wh-a-a-a-a-at?”“How much you offer? Tell me no play.”“500, no more!” I say, resuscitating. At this his eyes widen in shock, his lips quiver, he deflates, shakes his head and droops onto a stool. He supremely, has the theatrical credentials to act in this farce.“Please, don’t play”, Sinbad hectors, faking a scowl. “For that price I put it back. This is hand made. It takes three women two weeks to make. Please talk good, talk serious. I’ll make it 1400, for you.”“500!” I affirm, feigning injury.“Look my friend” he reasons, “you African, me African. This is Africa-friendly price. If you American, the price is 2500 dirham, not a dirham less. OK friendly special African price 1300 dirham.”“Impossible” I pant. “500 is the best I can do. I’m sure you have cheaper things to sell”.“Look, you African. Look, your skin, your colour, just like mine, just like Morocco people! You actually Moroccan!”“Oh thank you!”10

“For you, I give Morocco people price. 1200 dirham. You OK I put in a bag now. This excellent Kaftan, makes you strong with women!” As the huile d’Argan I’d bought earlier had also been guaranteed to make me strong with women, I started wondering whether I exuded impotence.“1200 is ridiculous. I’ll make you a special offer. 600 dirham.”“Look, please don’t play. 600 Dirham is not enough for workers, what about the silk and the wool?” Please be a good African. Give me 1000 dirham.”“Being a good African I’ll offer you 650.”

[… Ten minutes later…]“No, my Moroccan brother, don’t be like American man. Think again. I make exception for you, 800 dirham. Last, last final price” offers Sinbad.“As a good Moroccan, with my Moroccan colouring and all, I’ll offer you 700 dirham, final price and I must now go.”“OK OK not for you, not for me. 750 Dirham, 750? Yes? Yes? OK I put in bag.”

Kaftan for 750 Dirham

I took my kaftan and traipsed around the bustle of the souq for the next hour with still no idea of its fair price. But wait, what is “fair” price? Does it exist or is it a mere concept? Two days later, purely by chance, I got a peek under the opaque veil of kaftan prices. In the Treasures of Morocco store in the departure lounge of the airport, I saw a kaftan similar to mine with a price tag of 900 dirham. So I wasn’t that badly had after all.

Emboldened by this, I had a drink and prepared for my haggles in the souqs of Tunisia and Egypt.

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Notes

Opaque markets are markets in which the buyer has difficulty in assessing prices as they are not openly displayed. In transparent markets the displayed price is set at either the lower floor of costs plus a “fair” margin, or can be assessed from bid or offer schedules that are openly displayed in some form or other.

A souq (Arabic: سوق, also souk, suk, sooq, souq, or suq; technical transliteration sūq) is a (traditional) commercial quarter in an Arab or Berber city. Definition from Wikipedia.

In theory, the price settled upon by haggling should be the same as that settled upon by other trading systems (e.g. auction, open pricing etc.) provided a perfectly competitive market exists with complete and zero-cost information available to all. In practice this is rarely the case.

To the naïve who say that sellers in bargaining societies actually enjoy the haggling process and that if the buyer pays the inflated opening price they’re actually disappointed, I say “rubbish!” First, the customer flow at busy times in the souqs is such that sellers can’t waste their breath haggling with dumb suckers who cough up. There’s another sucker behind him who may need working over. Better save their “cultural” haggling for him. Second, I have never heard an account of earnest dismay on the face of anyone who has made a killing in any market. Money rules in business, that’s it. Third, the more money the seller makes the quicker he can sit in the cultural comfort of the local all-male hashish café with his male Arab mates watching Ronaldo score for Real Madrid on the ubiquitous flat-screen TV sets. I witnessed this scene for myself in countless North African cafés. Why tire yourself haggling with tourists, especially guileless Westerners with their misguided notions of fair business practice if you can rip them off soonest and get on with your lifestyle?

Which is why opaque pricing will persist – it confers several advantages on the seller. First, it serves the interests of the people who run the markets, i.e. the sellers. Second, most items sold in such markets are once-off transactions. There is little chance of retribution in the form of a potential boycott to keep the seller honest. Once a buyer has secured an item, say a silver bracelet putatively made by Tuaregs, he has likely fulfilled his lifetime quota of silver bracelets putatively made by Tauregs. He is unlikely to agitate for fair prices as he would for bread. Neither does he have the time to compare the price of the bracelet to that of similar bracelets at the next bracelet-selling stall as price discovery is equally difficult there. Third, items are often of relatively low value relative to the pocket of the buyer. Fourth, repercussion is unlikely to flow from the few potentially disgruntled buyers who may later discover that they have been had. Assuming the buyer has the information, the time and the intent to complain, there is the embarrassment factor to contend with. His complaint about a deal he had in any case agreed upon will be conducted in full view of an unsympathetic small horde. The scene is not worth it. Also, the seller can deny the sale occurred at his stall as receipts are not usually given. And so, the system beautifully persists.I assure you that if a law had to be passed requiring the open display of prices, all prices for identical goods in the souq would rapidly converge to a uniform, competitive price

Walking away is a bad technique some buyers employ after making a no-nonsense-one-and-only-take-it-or-leave-it-bid to parade their power in the conviction that the seller will run after them. It’s bad practise on two counts. First, the buyer has revealed his price which is exactly what the seller wants. Second, if the seller comes running after a buyer the seller is scoring heavily, for the buyer has revealed a price relative to what his pocket can bear. This may have no calibration whatsoever with the price of the good. The seller will only run after the buyer if it’s hugely to the seller’s advantage. Often these take-it-or-leave-it-I’ll-show-you-who’s-boss-bids are say 30% below the seller’s opening offer, which are 100% or more above where the seller is prepared to settle. Who has the last laugh?

Medina – the old Arab quarter of a North African city. Definition from Dictionary.com.

About quality: In Cairo, a perfume seller held a match over what he claimed was a flask of concentrated lotus oil “to prove” it wasn’t diluted with alcohol. The trickery he was trying to convey is that any alcohol present in the flask would have caught flame, and his oil wasn’t, therefore it was undiluted. Take it from me as an ex-organic chemist: This is a poor test as low concentrations of alcohol (say up to 20%) would also not burn. There could still be much alcohol in the flask. You need more sophisticated tests to prove the absence of alcohol. Hence the need for bureaux of standards and the official imprimaturs of government departments on many expensive national products (e.g. the government of India’s endorsement of sandalwood oil, the authentication of saffron in Spain etc.). In the souq the buyer just doesn’t know.

As at 15 November 2010, 1 US Dollar = 8.21 Moroccan dirham = 6.99 ZAR. His opening price was therefore 183 US Dollars or 1277 South African Rand. This is otherwise known as way too much.

My swarthy yellow-and-ochre complexion is claimed by many nationalities and races. In a temple in Thailand I was told I looked just like a Thai. In India a street urchin told me I looked just like an Indian, just like an Indian. I’m often asked whether I’m Italian or Lebanese or French. At the pyramids they asked me whether I was Egyptian, and if not, then at least my mother or father had to be. And only last Friday at a nightclub I heard for the umpteenth time that I must definitely be Jewish. Enough. My next holiday is to blue-eyed-blonde-haired Sweden.